TWA FFB/Aviators - (New) Company Plans $1B Bid for TWA

A group of unidentified aviation experts and investors said it would bid nearly $1 billion to acquire Trans World Airlines, doubling the amount American Airlines said it would pay to take over the troubled carrier.

Details: http://biz.yahoo.com/apf/010208/twa_new_bi_2.html

Cheers.

Here's the full story from AIRWISE:Feb 8, 2001

A new company formed by aviation experts and investors will bid nearly USD$1 billion to acquire Trans World Airlines (TWA), doubling the amount American Airlines said it would pay to take over the troubled carrier.

Jet Acquisitions Group Inc. of Scottsdale, Ariz., wants to eliminate TWA's current debt, retain most of its current employees, modernize its facilities and eventually expand the airline.

"Our group is adamant that TWA should be preserved as an independent and financially viable airline," group spokesman Stanford E. Lerch said in a statement. "Our bid is more than twice the size of the nearest offer for TWA that was previously made by American Airlines."

The company did not provide details about how its bid would be financed, but said it would provide a USD$1 billion guarantee "shortly."

Michelle Tuchman, a spokeswoman for the company, said she could not say who was involved in the group. "I can't give you the specifics. It's fair to say that some of them are former airline executives and general investors," she said.

Tuchman specifically said, however, that Carl Icahn, the billionaire financier who formerly ran TWA, was not involved in the group.

Including the assumption of USD$3.5 billion in lease obligations and USD$1.7 billion that would be spent on expanding TWA's fleet, Tuchman said the total value of Jet Acquisitions Group's offer would be USD$6.2 billion.

Last month, American's complicated bid to scoop up TWA included the acquisition of parts of US Airways from United Airlines and a large stake in a new startup carrier for USD$1.8 billion in cash and USD$3.5 billion in lease obligations.

United agreed to sell some US Airways assets to American in an effort to win regulatory approval for its own blockbuster purchase of US Airways.

American, based in Fort Worth, Texas, has said it would pay USD$500 million for most of TWA's assets, including up to 190 planes and the St. Louis hub. It also would pay USD$82 million for a 49 percent stake in DC Air, a minority-owned start-up of United Airlines and US Airways that would serve 44 markets out of Washington's Reagan National Airport.

The American proposal is awaiting approval of federal regulators.

"The way it's set up, anyone is free to bid," American spokesman John Hotard said in response to Jet Acquistions' bid. "They're free to bid whatever they want."

A federal judge has extended the deadline for bids for TWA until February 28.

"The point of the auction process is to allow higher and better offers to come forward," said TWA spokeswoman Julia Bishop-Cross. "TWA will consider any higher and better legitimate offer."

Edward Manhart, a spokesman for the International Association of Machinists, which represents TWA's machinists and flight attendants, said the union expected more offers, but didn't expect one so soon.

"I've been telling the membership that until all of the offers are on the table, to save a lot of feelings, we should wait until we see what all the offers are," Manhart said.

Under court-approved procedures, American's USD$500 million buyout plan - including the assumption of up to USD$3 billion in debt - would be an auction starting point.

Other bidders would have to offer at least USD$75 million more - USD$10 million plus the USD$65 million breakup fee that would be paid to American by TWA if the deal isn't completed.

TWA filed for bankruptcy January 10. Then it said it had USD$2.1 billion in assets and USD$2.4 billion in debts.

Regardless of the outcome, we at American wish all TWA employees the very best.

Just one thought: If another party does come in and purchase TWA, it will be interesting to see how the Admiral's Club and other preliminary "perks" will be separated.

[This message has been edited by EA/AA/FA (edited 02-08-2001).]

Well, I still want AA to pick up TWA. I don't think TWA can survive as an ongoing concern independantly.

Maybe if they linked up as a Junior Partner to a major, it would be possible.

Who knows? Maybe they'll stay "independant" but merge into the AAdvantage program...

All employees with American truly want the best for TWA and its employees.

I sincerely hope this "Group" is not a Lorenzo in sheeps clothing. I don't feel good about this, and I feel TWA will be in the same predicament in the next five years. I hope not....it is just a feeling.

I don't believe AA will continue to fund TWA if another serious bidder comes forward.

See also:
http://www.flyertalk.com/forum/Forum109/HTML/001561.html
http://www.flyertalk.com/forum/Forum109/HTML/001640.html

Ladies and Gentlemen, more news regarding this subject from AIRWISE:

Feb 9, 2001

Mystery still surrounds a secretive Arizona investment group's plan to outbid American Airlines and buy Trans World Airlines (TWA).

Analysts question whether Scottsdale-based Jet Acquisition Group Inc. will actually follow through with its plan to beat American Airlines bid and take TWA out of bankruptcy.

In releasing a statement on Wednesday that it plans to offer USD$1 billion in cash for TWA, more than doubling American's bid, Jet Acquisitions said it wants to preserve TWA as an independent airline, retain most of its employees and eventually expand TWA, which last month filed for bankruptcy for the third time in a decade.

Rick Manter, a spokesman for Jet Acquisitions, said yesterday the group thought it unwise to release any more information until it made its bid sometime around a February 28 bidding deadline set by a federal judge.

"It's unusual to introduce any more information than necessary until a bid is delivered. It jeopardizes your bidding status," Manter said. "As far as we're concerned here, either you have the money or you don't. This group is prepared to put up USD$1 billion as a guarantee. I think the proof is in the pudding."

Manter would only say that the group included an investor who controls more than USD$1 billion in assets, another who has invested in several airlines, and representatives with significant banking and aviation backgrounds.

Representatives of American and TWA downplayed news of the offer.

"Anyone is free to bid," American spokesman John Hotard said.

"The point of the auction process is to allow higher and better offers to come forward," TWA spokeswoman Julia Bishop-Cross said.

Including the assumption of USD$3.5 billion in lease obligations and USD$1.7 billion that would be spent on expanding TWA's fleet, the total value of Jet Acquisitions' offer would be USD$6.2 billion.

American's complicated bid to buy TWA includes the acquisition of parts of US Airways Group Inc. from UAL Corp.'s United Airlines and a large stake in a new startup carrier for USD$1.8 billion in cash and USD$3.5 billion in lease obligations.

American, based in Fort Worth, Texas, has said it would pay USD$500 million for most of TWA's assets, including up to 190 planes and the St. Louis hub.

American also would pay USD$82 million for a 49 percent stake in DC Air, a minority-owned startup being created as a result of the United Airlines-US Airways combination that would serve 44 markets out of Washington's Reagan National Airport.

Of course if I was from TWA who had a golden parachute and probably was going to be offered a high exec position with AA, I'd downplay the news as well (knowing I was going to be replaced by someone else who is going to run the airline).

Affection for a great old airline name isn't going to make that name profitable. TWA hasn't shown a profit in 12 years -- through the biggest boom period in the history of the industry. How is a new investment group going to change TWA? Its costs are too high and the route structure doesn't have critical mass. It can't be made an independently profitable entity. End of story.

Well its not just a great old Airline Name, they have got the best upgrade domestic policy in the United States! I have to admit, I hate coupons! But I also have to admit, that more money on the fire isn't going to help TWA any. Just the big items to straighten and strenghten TWA out is to get rid of Carl now, start fuel hedging, have enough credit (money resources) that they can bring down the lease rates on their planes, as well as what it costs to maintain them, and instead of a focus cities which are fueled mainly by American Eagle, or any mini-hubs to actually have one or two more domestic hubs within the U.S. Not to mention, make TWA, TWA again, i.e. Trans World, more overseas operations. But this is a big task and lots of money. Good luck to JAG if they will take on this whole ball of yarn!